NE 29-93-1 Tax Incentives 1993-02-12

Can a company just start paying the county the property taxes on property that's exempt under Nebraska's LB 775 incentive agreement?

Short answer: No — not voluntarily. Under Revenue Ruling 29-93-1, property tax on personal property that is exempt under the Employment and Investment Growth Act may not be paid to the county until either the taxpayer requests to amend its agreement or the project has fallen into recapture. A county has no authority to accept such a payment while the exemption stands. If the taxpayer asks to amend, the Tax Commissioner can't approve the amendment until the back property taxes plus interest are paid; the Commissioner then notifies the counties to accept payment, and approves the amendment on proof of payment. If the project falls into recapture under Neb. Rev. Stat. § 77-4107, the Commissioner notifies the counties, which bill the taxpayer for the tax and interest due. Interest runs from the date the tax would have been due had the property not been exempt under § 77-4105(2), at the rate in § 45-104.01.

Apply this to your situation

This page answers the general question as of 1993. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

A company holding a Nebraska Employment and Investment Growth Act (LB 775) agreement gets a personal property tax exemption. This ruling answers an unusual question: can that company voluntarily start paying the county the property taxes it would otherwise owe — for example, to unwind or walk back the exemption for a year?

The holding is no — not while the exemption is in place. The tax on personal property exempted under the Act may not be paid to the county where the property would otherwise be taxed until one of two things happens:

the taxpayer requests to amend its agreement, or
the project has fallen into recapture.

Until then, the county has no authority to accept such a payment. The exemption can't be treated as "removed" (which is what would create a property tax liability) unless the taxpayer has requested an amendment or the project is in recapture.

If the taxpayer requests an amendment: the Tax Commissioner may not approve it until the property taxes on the exempted property, together with interest, have been paid. The Commissioner notifies the affected counties of the request, directs them to accept the tax-plus-interest payment, and — on proof of payment and once other requirements are met — approves the amendment.

If the project falls into recapture (as specified in Neb. Rev. Stat. § 77-4107): the Commissioner notifies the counties, which then bill the taxpayer for the amount of tax and interest due on the property.

Interest is calculated from the date the tax would have been due had the property not been exempt under § 77-4105(2), at the rate specified in § 45-104.01 (as amended by Laws 1992, Fourth Special Session, LB 1, § 4).

The example in the ruling involved a taxpayer whose agreement required it to invest $10 million and employ 100 new employees. Approved by State Tax Commissioner M. Berri Balka on February 12, 1993.

Source-quality note: the official PDF is a scanned image and the machine-extracted "Original ruling text" below is partly garbled. The holding, procedure, and statutory citations summarized here were confirmed against a cleaner reading of the same scanned document; the raw extraction is preserved below for transparency.

What this means for you

A company with an LB 775 property tax exemption

You can't simply cut the county a check to "buy back" into taxation for an exempt year. The only routes to creating (and paying) that property tax liability are formally requesting to amend your agreement or having the project go into recapture — and either way you'll owe interest back to the original due date. Don't expect a county to accept a voluntary payment outside those channels; it isn't allowed to.

Counties and assessors

A county cannot accept property tax on Act-exempted property on its own. It acts only after the Tax Commissioner notifies it — following an amendment request (payment plus interest) or a recapture determination.

Common questions

Q: Can I voluntarily pay the county the property tax on my LB 775-exempt property?
A: No. Payment can't be made until you request to amend your agreement or the project falls into recapture. Otherwise the county has no authority to accept it.

Q: What happens when I request to amend my agreement?
A: The Tax Commissioner won't approve the amendment until the back property taxes plus interest are paid. The Commissioner directs the counties to accept the payment and approves the amendment on proof of payment.

Q: How is interest computed?
A: From the date the tax would have been due had the property not been exempt under § 77-4105(2), at the rate in § 45-104.01.

Citations and references

Employment and Investment Growth Act (LB 775) — the program providing the personal property tax exemption.
Neb. Rev. Stat. § 77-4107, R.R.S. 1943 — recapture, one of the two triggers for creating the property tax liability.
Neb. Rev. Stat. § 77-4105(2), R.R.S. 1943 — fixes the date the tax would have been due, from which interest runs.
Neb. Rev. Stat. § 45-104.01, R.R.S. 1943 (as amended by Laws 1992, Fourth Spec. Sess., LB 1, § 4) — the applicable interest rate.

Source

Original ruling text

Revenue Ruling 29-93-L

Exemption. THE TAX UPON PERSONAI, PROPERTY TIIAT HAS BEEN EXEMPTED

PURSÚA}TT TO THE EMPLOYMENT AI.¡D IN\TESTMENT GROWTH ACT MAY NOT BE
PAID TO THE COT'NTY IN WHICH THE PROPERTY WOULD HAVE BEEN SUBJECT TO
TAX T,NTIL THE TAXPAYER REQUESTS TO AII{END ITS AGREEMENT OR THE
PROJECT HAS FALLEN INTO RECAPTURE.

Advise has been requested regarding the ability of a taxpayer, wh9
ís receiving a proferty tax exenption under an agreemgnt to invest
$10 rníIlion-and emþIoy-100 new employees, to begin making paYments
of the property faxãs that would have been assessed u.P9n the
exempted- prãperiy for

exemption.

the year or years that ít was receiving an

Before a property tax exempt,ion m
creating a property tax liability
an anendment of its agreement, or
recapture. The county is without
tax which would have been asses
been exempt by the provision o
Growth Act.

If a taxpayer has requested that its agreement be amended, the Tax
Conurissiõnêr may not ãpprove the amendment until the_ prop_erty t,aTes
upon the exemptäa propãity, together with interest, have been paid.
The Tax Commissioner shall¡ upo
notify the respective counties o
the count,íes to accept the payme
with interest. .Upon proof of pa
provided other requírements hav
shall approve the request to amend.
If the project has fallen into recapturer_ as speciti_ed in section
77-4L07-, ñ.R.S. 1943, t,he Tax Córunissioner shall notify tlt"
respective counties. ùhe counties shall then proceed to notify tþe
taxþayer of the amount of tax anl interest duL and owing upon the
property.
Interest shall be calculated from the date the tax would have been
been exempt pursuant to section 77-4L05
due had the property
-1943, ät not
(21 , R.R.S.
the rate spéciÍied in sêct,ion 45-104.01,
n.R.S. 1943r âS amended by Laws tggZ, Fourth Spec. Sess., LB Ll
sec. 4.
D¡

M. Berr L

State Tax

February 12, 1993

ner

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